Why Is Crypto Crashing Today?

The Crypto Market Crash: A Deeper Dive

The crypto market has experienced a substantial sell-off, eroding over $400 billion in market value within 24 hours. Major cryptocurrencies such as Bitcoin, Ethereum, XRP, and Dogecoin have all suffered losses, with some declining by nearly 20%.

Key Factors Driving the Turmoil

Trade War Sparks Fear

The recent geopolitical tensions and trade disputes have played a significant role in the market's decline. Former U.S. President Donald Trump's imposition of tariffs under the International Emergency Economic Powers Act has raised concerns about higher trade barriers, inflation, and economic instability.

Slowdown in Bitcoin Network Activity

In addition to external factors, Bitcoin's network activity has witnessed a sharp decline. Reduced transaction volume and low transaction fees indicate a drop in demand for block space. This is the lowest level of activity since 2024.

Mass Liquidations

The market has witnessed a surge in liquidations, with over $2.18 billion worth of crypto positions wiped out, impacting more than 715,000 traders. Long traders bore the brunt of the losses, while short traders experienced smaller losses.

Strengthening U.S. Dollar

The rise in the U.S. Dollar Index (DXY) and Treasury yields has exerted downward pressure on Bitcoin. Historically, Bitcoin's price has exhibited an inverse relationship with the dollar, indicating that a stronger dollar can lead to lower BTC prices.

Critical Support Level for Bitcoin

Bitcoin is currently hovering around the $93,000 level. A breach below $90,000 could trigger further declines, while a recovery above $95,000 could restore its bullish momentum. The Crypto Fear & Greed Index has shifted to a "Fear" sentiment, reflecting the current market uncertainty.